Start-up Funding | |
Start-up Expenses to Fund | $575,000 |
Start-up Assets to Fund | $425,000 |
Total Funding Required | $1,000,000 |
Assets | |
Non-cash Assets from Start-up | $200,000 |
Cash Requirements from Start-up | $225,000 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $225,000 |
Total Assets | $425,000 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $1,000,000 |
Long-term Liabilities | $0 |
Accounts Payable (Outstanding Bills) | $0 |
Other Current Liabilities (interest-free) | $0 |
Total Liabilities | $1,000,000 |
Capital | |
Planned Investment | |
Investor 1 | $0 |
Investor 2 | $0 |
Other | $0 |
Additional Investment Requirement | $0 |
Total Planned Investment | $0 |
Loss at Start-up (Start-up Expenses) | ($575,000) |
Total Capital | ($575,000) |
Total Capital and Liabilities | $425,000 |
Total Funding | $1,000,000 |
We have two locations, one in Kahului, Maui and the other in Hilo, Hawai’i. The two offices are presently being leased by Servco Pacific, Inc., and we will rent from them on a month-to-month basis until we are able to relocate to more suitable facilities. On Kauai, we have a sub-contractor agreement with Kauai Office Equipment to handle installations and service.
IMH will acquire an existing operation whose primary business has been the sale and service of business appliances (copiers, facsimiles, printers, etc.) and has operated as a part of the office equipment industry. We will build from this base to transform the business into a value-added provider of the emerging services and technologies of the new Information Industry. Following the lead of Canon, USA and other manufacturers which we represent, we will approach the marketplace from a total systems solutions viewpoint.
This new paradigm will begin with an analysis of the client’s existing and planned business processes, and will provide total workflow solutions utilizing multifunctional imaging platforms and information distribution systems. These systems will be backed by professional and reliable technical service and proactive customer service. By forming strategic alliances with local Information Industry Value-Added Resellers, we will be able to offer turnkey Local Area Network (LAN) systems and the ability to retrofit existing LAN and peer-to-peer systems.
Copies of our product and sales literature are attached as appendices. Of course, one of our first tasks will be to change the message of our literature to make sure we are selling the company, rather than the product.
IMH will market and sell brand name business information distribution systems and hardware, technical service and support for these products, and the consumable supplies used by these systems. We will be a single-source provider for business information and imaging products and services.
After researching our various manufacturer’s offerings and evaluating our core competencies, we will focus our marketing and sales efforts around the digital products offered by Canon USA and eCopy, Inc. We will supplement this product line with Lexmark and Hewlett Packard printer products. As we continue to transition the company into the digital marketplace, we will form alliances with additional IT manufacturers and suppliers who can round out our product and services line.
Hardware product offerings will include:
Software offerings will include:
Service Products include:
Professional Services include:
The only way we can hope to differentiate well is to define the vision of the company to be an information technology ally to our clients. We will not be able to compete in any effective way with the large mainland-based office equipment companies by selling boxes or products as appliances. We need to offer a real alliance to our local customers.
Unfortunately, we cannot sell the products at a higher price just because we offer services; the market has shown that it will not support that concept. We have to also sell the service and consumable supplies and charge for them separately. This monthly recurring revenue is the foundation of our financial stability.
New technology has changed almost everything about the traditional office equipment (copier) industry, and for all practical purposes it no longer exists. The new Information Industry has emerged because of the technology of convergence. The primary driver of convergence of different forms of information is technological change, specifically the rapid diffusion of digital technology into an ever-wider array of information businesses. Beyond digitization, dramatic changes in computing and telecommunications industries (mainly in faster microprocessors and increasing bandwidth) are also driving convergence.
IMH will make convergence the theme of its vision, planning, and marketing strategies. We will move into the new Information Industry’s technology with the aim of bringing the most efficient workflow solutions to our clients while providing value-added customer support and service, and earning a reasonable profit in the process.
Our strategy hinges on providing unparalleled service and support, which is critical to setting us apart from the competition. We need to differentiate on service and support in order to become true partners with our clients. Our service offers will include:
Beginning at start up, we will explore and research new information technologies for inclusion in our product offerings. The products which we choose will be in line with our vision to transition the company from being an appliance seller, to being a provider of total information management solutions. These convergent information products will include:
We have an established relationship with our manufacturers and suppliers, and will be able to take advantage of all discounts and promotions in order to keep our margins at roughly 49% throughout the operation. We will also implement and employ “just-in-time” inventory strategies for hardware, supplies, and service parts orders to further strengthen our margins.
As we continue to grow the business, we will evaluate other IT industry manufacturers and product lines to strengthen our offerings with a view primarily to quality and margin advantages.
IMH will focus on local markets, including small offices and home offices (1-9 employees), medium to large businesses (10-99 employees), corporate Hawai’i (multiple locations or 100+ employees), and local government offices.
Our market segmentation scheme is fairly straightforward, and focuses on all Neighbor Island businesses. The information contained in our customer analysis table is taken directly from the 2000 US Census and government directories, and clearly shows that our largest market potential is the small office and home office (SOHO) segment. This segment is largely overlooked by most of our competitors because of its “low end” buying habits, and a reluctance to compete with the major retail chain box movers. We will target the SOHO market segment with value-added and affordable business solutions customized to its unique needs, and offer the same quality of service and support as are afforded the larger businesses.
The next largest market segment is medium to large businesses, and is the arena where we now focus most of our sales efforts. We will continue to target this segment, but with a different approach than our predecessors. The strategy used by former management has been to bring in selected products, and then attempt to find a buyer. This resulted in inventory overstock, and obsolescence. We will work with the medium to large businesses to determine their needs, and design customized solutions before ordering the required systems (JIT inventory strategy). This segment will remain an extremely important part of our marketing mix, and contains a large portion of our current clients. A majority of our systems upgrade opportunities and repeat business will come from this market segment initially.
Although the Corporate Hawai’i market segment is the smallest in numbers, it has the potential to provide a significant share of our revenues and growth (the 80/20 rule). We have a scattering of current clients in the Corporate Hawai’i segment, but we need to do a better job of penetrating this lucrative end of the market. We will accomplish this by offering professional services to include workflow and network design, MIS support, and other value-added support benefits such as “uptime guarantees.” We will develop long-term relationships within this segment, and earn their business.
The local government market segment is unique in that we act primarily as a “middle man” for our manufacturers due to GSA price schedules and other national government-only programs. This segment is fiercely competitive, very price-focused, and buying decisions are often influenced by “who you know,” as well as price. We are fortunate in that we have long-established relationships within the County and State government agencies, and have many loyal clients in this segment. We will increase our share of this market segment by offering the same value-added service and support benefits that we bring to our commercial clients.
Market Analysis | |||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
Potential Customers | Growth | CAGR | |||||
SOHO | 4% | 6,800 | 7,072 | 7,355 | 7,649 | 7,955 | 4.00% |
Medium/Large Business | 4% | 2,100 | 2,184 | 2,271 | 2,362 | 2,456 | 3.99% |
Corporate Hawaii | 3% | 140 | 144 | 148 | 152 | 157 | 2.91% |
Government Offices | 2% | 1,225 | 1,243 | 1,262 | 1,281 | 1,300 | 1.50% |
Total | 3.69% | 10,265 | 10,643 | 11,036 | 11,444 | 11,868 | 3.69% |
Developing a market strategy is a departure from the way the company has been managed in the past. We will change the paradigm of being a product- and price-focused sales organization, to that of becoming a customer- and market-focused organization, with all departments sharing responsibility for customer satisfaction. We will accomplish this paradigm shift through the implementation of a balanced scorecard philosophy of management, with special attention to employee learning and growth.
As mentioned previously our market segmentation strategy is straightforward, and addresses all components of the Neighbor Island business community. Planning and implementing specific strategies for each of the four identified segments will be an on-going process, and we will consult with marketing specialists, and our manufacturers, to further refine these efforts as we develop our marketing plan.
That is the primary reason that IMH has chosen Canon USA as its preferred manufacturer. Canon has led the way in the industry with it’s digital technology innovations, and its ability to bring both the product and the concept to the marketplace. We will follow Canon’s lead and bring this efficient, productivity-enhancing technology to Neighbor Island businesses.
As computer prices continue to fall, unit sales increase. The published market research on sales of personal computers is astounding, as the United States market alone is absorbing more than 30 million units per year, and sales are growing at more than 20 percent per year. We could quote Dataquest, Infocorp, IDC, or others; it doesn’t matter, they all agree on high growth of CPU sales.
This rapid growth rate holds true for productivity systems which connect to the computers being sold. The stand-alone analog systems and appliances which abound in the business marketplace today, will be replaced by connected digital convergence systems in the coming months and years. IMH will position itself to be a value-added provider of this rapidly emerging technology for new businesses, while continuing to maintain and upgrade our current analog customer base.
All businesses have in common a need to be continuously productive, and they rely on their service providers and vendors to sustain their productivity. Effectively filling this need requires that the vendor bring to the table sound planning, quality products, reliable service, and a true partnership and support relationship.
Specific business needs include the ability to gather, compile, analyze, and distribute information in various media formats. This is where IMH’s strengths will be most beneficial to our clients, both big and small. Anyone can sell the “box” at an attractive price, but only a true value-added provider can offer the peace-of-mind that comes from a customer-focused approach to the relationship.
Primarily due to geographic isolation and smaller populations, the Neighbor Island business community has an additional common need of being able to rely on other locally-based vendors and suppliers for quick, reliable, customer service and support. Having to call someone on Oahu, or the mainland, to place a service call, or to order supplies, or get an answer to a simple billing question, is both an irritant and a hindrance to most Neighbor Island-based businesses. Our primary goal is to fill this need by bringing true pro-active, and total, customer service to the Neighbor Island business community, and to gain their confidence and loyalty. This will become one of our underlying strengths.
IMH is a part of the Information Industry, and specializes in providing information management systems and technology for business processes. We envision that a converged information industry operating within the context of an advanced information infrastructure will be a huge boost for U.S. businesses. Several Washington think tanks estimate that it could spur more than $300 billion annually in new sales and increase worker productivity by 20 to 40 percent.
At the present time, an estimated two-thirds of all American jobs are information related, and that number will increase as the shift from manufacturing to service industries continues. The convergence of information industries will continue because the technological and business imperatives are compelling. If one company does not see the possibilities, another will.
Business decision makers and finance managers understand the concept and value of service and support, and are much more likely to pay for it when the offering is clearly stated.
There is no doubt that we compete more against the box pushers than against other service providers. We need to effectively compete against the idea that businesses should buy information platforms as plug-in appliances that don’t need ongoing service, support, and training.
Our research and experience has indicated that our target market segments think about price, but would buy based on quality service if the offering were properly presented. They think about price because that is what is traditionally presented to them first. We have very good indications that many would rather pay 10-20% more for a relationship with a long-term vendor providing back-up and quality service and support. They end up in the box-pusher channels because they are not aware of the alternatives.
Availability is also very important. The business decision makers tend to want immediate, local solutions to problems.
Medium to large business segment buyers are accustomed to buying from vendors who visit their offices. They expect the copy machine vendors, office products vendors, and office furniture vendors, as well as the local graphic artists, freelance writers, or whomever, to visit their office to make their sales.
Unfortunately our SOHO target segment buyers may not expect to buy from us. Many of them turn immediately to the retail superstores (office equipment, office supplies, and electronics), the Web, and mail order to look for the best price, without realizing that there is a better option for them for only a little bit more. We will overcome this hurdle through innovative service offerings, and targeted marketing.
In our higher-end targeted segments (medium to large businesses, corporate Hawai’i, and government offices), the primary competitors are Xerox and Lanier. The secondary “low end” competitors on the Neighbor Islands are Maui Office Machines and Business Equipment on Maui, and Electronics Hawai’i and Stationers on the Big Island. Our overall competitive strategy in these segments will be Canon’s superior technology, and superior value-added service and support.
In our SOHO target segment, the primary competitors are the superstores: Office Max, Office Depot, Sears, and to some extent Costco, Hopaco, and the Web. While these outlets can offer lower prices, they offer no (or very little) aftermarket service or support. That is our competitive advantage in this segment, and will differentiate us from these “box movers.”
The traditional office equipment (copier) industry has been dominated by only a few major manufacturers: Xerox, Canon, Oce, and Ricoh (and its OEM products – Lanier, Savin, and Gestetner); and then come the low-end players: Sharp, Toshiba, and Minolta. With the exception of Xerox, which maintains its own sales force, the other manufacturers distribute and sell mainly through authorized dealers.
The rapidly emerging Information Industry’s digital convergence products will most likely be dominated by the same participants as described above. While Xerox has been a past leader in the manufacture and sales of analog products, Canon has emerged as both an innovator, and the leader, in the new Information Industry with their ImageRunner digital products and Image Platform information distribution systems. Canon is also (and has been for many years) the front runner in color repro-graphic systems, and holds the most patents of any manufacturer in the industry.
We must differentiate ourselves from the box pushers. We need to establish our business offering as a clear and viable alternative for our target markets, to the price oriented sales pitch to which they are accustomed.
The industry’s cheese has been moved. In order to shift to a more contemporary paradigm, our marketing and sales efforts will need:
Our competitive edge is our positioning as a strategic ally with our clients, who are clients more than customers. By building a business based on long-standing relationships with satisfied clients, we simultaneously build defenses against competition. The longer the relationship stands, the more we help our clients understand what we offer them and why they should both stay with IMH, and refer us to other businesses. In close-knit communities like the Neighbor Islands, reputation is extremely important, and word-of-mouth advertising is invaluable.
Our main strategy will be placing emphasis on service and support, and our main tactics are networking expertise, systems training, and implementing a customer relationship management system (CRM) from e-automate. Our specific programs for networking include mailers and internal training. Specific programs for end user training include direct mail promotion, and on-site customer programs. Implementing the CRM software and training will be coordinated with the e-automate Corporation.
Our second strategy is emphasizing relationships. The tactics are marketing the company (instead of the products), more regular contacts with the customer, and increasing sales per customer. Programs for marketing the company include new sales literature, and direct mail. Programs for more regular contacts include call-backs after installation, direct mail, and sales management. Programs for increasing sales per customer include upgrade mailings and sales training.
IMH offers its clients peace-of-mind by being a vendor who acts as a strategic ally, and delivers quality products backed by premium service and support, at a premium price.
We will sell the company and its ability to act as an ally. We will sell IMH, and the reputation of the industry-leading manufacturers it represents.
We will sell our service and support. The hardware is like the razor, and the support, service, software, and training, are the razor blades. We need to serve our customers with total solutions, and not just product features. The products are a means to arriving at end solutions.
The Yearly Total Sales chart summarizes our conservative sales forecast. We expect sales to increase from $3.1 million in the first year to more than $4 million in the third year of this plan.
The important elements of the sales forecast are shown in the following Chart, and Table 5.4.1. Non-hardware sales increase to almost $2 million total in the third year, or 47% of total sales.
Sales Forecast | |||
Year 1 | Year 2 | Year 3 | |
Sales | |||
Hardware – Image Platforms | $1,092,956 | $1,256,899 | $1,445,434 |
Hardware – Printers | $69,615 | $80,057 | $92,066 |
Hardware – Facsimiles | $142,711 | $164,117 | $188,735 |
Hardware – Misc (TW, Shrd) | $45,250 | $52,037 | $59,843 |
Professional Services | $29,808 | $34,279 | $39,420 |
Government (Comp) | $87,019 | $100,072 | $115,082 |
Supplies (Toner/Paper) | $501,228 | $576,412 | $662,874 |
Service – Agreements/Repairs | $946,764 | $1,088,779 | $1,252,095 |
Equipment Rentals | $243,653 | $280,200 | $322,230 |
Other | $31,327 | $36,026 | $41,430 |
Total Sales | $3,190,329 | $3,668,878 | $4,219,209 |
Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
Hardware – Image Platforms | $677,632 | $772,501 | $880,651 |
Hardware – Printers | $45,250 | $51,585 | $58,807 |
Hardware – Facsimiles | $88,481 | $100,868 | $114,989 |
Hardware – Misc (TW, Shrd) | $31,675 | $36,109 | $41,165 |
Professional Services | $14,904 | $16,990 | $19,369 |
Government (Comp) | $30,457 | $34,720 | $39,581 |
Supplies (Toner/Paper) | $225,553 | $257,130 | $293,128 |
Service – Agreements/Repairs | $378,706 | $431,724 | $492,166 |
Equipment Rentals | $134,009 | $152,770 | $174,158 |
Other | $7,832 | $8,928 | $10,178 |
Subtotal Direct Cost of Sales | $1,634,497 | $1,863,326 | $2,124,192 |
The following table lists important program milestones, with dates and managers in charge, and budgets for each. The milestone schedule indicates our emphasis on planning for implementation. The most important programs are the sales and marketing programs listed in detail in the previous topics.
Milestones | |||||
Milestone | Start Date | End Date | Budget | Manager | Department |
SIOT (NI) Valuation | 5/1/2001 | 5/31/2001 | $0 | BH | Admin |
Complete Business Plan | 5/14/2001 | 6/22/2001 | $200 | BH | Admin |
Submit Letter of Intent | 6/1/2001 | 6/15/2001 | $0 | BH | Admin |
Choose New Company Name | 6/15/2001 | 7/31/2001 | $0 | All | All |
Secure Startup Funding | 6/15/2001 | 7/31/2001 | $0 | BH/All | All |
Retain Attorney/CPA | 6/15/2001 | 7/31/2001 | $10,000 | BH | Marketing |
Negotiate Purchase Agreement | 6/18/2001 | 8/15/2001 | $0 | BH/All | Admin |
Set Up ESOT/ESOP | 6/30/2001 | 8/31/2001 | $12,500 | BH/LW | All |
Set Up New Corporation | 6/30/2001 | 8/31/2001 | $12,500 | BH/LW | All |
Solicit Board Members | 6/30/2001 | 8/31/2001 | $0 | BH | All |
HR Roll-Over Plan (SPI to IMH) | 7/1/2001 | 8/31/2001 | $0 | BH/LW | Admin |
Purchase e-Automate Software | 8/1/2001 | 8/31/2001 | $20,000 | BH/LW | Admin |
A/P & A/R into e-Automate | 8/1/2001 | 8/31/2001 | $0 | LW | Admin |
Business Licenses/Permits | 8/1/2001 | 8/31/2001 | $500 | BH/LW | Admin |
Customers into e-Automate | 8/1/2001 | 8/31/2001 | $0 | JM/BK | Sales |
Inventory into e-Automate | 8/1/2001 | 8/31/2001 | $0 | LW/JA/EO | Service |
Letter To Vendors/Customers | 8/1/2001 | 8/31/2001 | $0 | LW | Admin |
New Stationary/Brochures | 8/1/2001 | 8/31/2001 | $2,500 | LW | Admin |
Obtain Insurance | 8/1/2001 | 8/31/2001 | $25,000 | BH/LW | Admin |
Switch Utilities To IMH | 8/1/2001 | 8/31/2001 | $1,000 | LW | Admin |
Web Site Development | 8/1/2001 | 8/31/2001 | $10,000 | BH | Admin |
Complete Marketing Plan | 8/1/2001 | 8/31/2001 | $2,500 | All | Sales |
IMH Operations – Day 1 | 9/3/2001 | 9/3/2001 | $0 | All | All |
Bd. of Dir. Mtg. (First) | 9/4/2001 | 9/7/2001 | $1,000 | All | All |
All Company – Kick Off Mtg. | 9/4/2001 | 9/7/2001 | $750 | All | All |
Sales Strategies & Programs | 9/4/2001 | 9/30/2001 | $2,500 | JM | Sales |
Marketing Strategy & Programs | 9/4/2001 | 9/30/2001 | $3,500 | BK | Sales |
First Quarter BP Review | 12/10/2001 | 12/14/2001 | $0 | All | All |
Headcount Review | 12/10/2001 | 12/14/2001 | $0 | BH/EO/JA | Sales/Svc |
Bd. of Dir. Mtg. (Qtrly) | 12/10/2001 | 12/14/2001 | $1,000 | All | All |
Cost IT Training Sources | 3/4/2002 | 3/8/2002 | $0 | BH/EO/JA/BK | Sales/Svc |
Second Quarter BP/MP Review | 3/4/2002 | 3/8/2002 | $0 | All | All |
Enroll Team in IT Training | 3/18/2002 | 3/29/2002 | $2,500 | All | All |
Third Quarter BP/MP Review | 6/3/2002 | 6/7/2002 | $0 | All | All |
Bd. of Dir. Mtg. (Qtrly) | 6/3/2002 | 6/7/2002 | $1,000 | All | All |
Fourth Quarter BP/MP Review | 9/2/2002 | 9/5/2002 | $0 | All | All |
Bd. of Dir. Mtg. (Qtrly) | 9/2/2002 | 9/5/2002 | $1,000 | All | All |
New 3-Year BP Due | 9/2/2002 | 9/13/2002 | $0 | All | All |
New 3-Year Mktg. Plan Due | 9/2/2002 | 9/13/2002 | $0 | All | All |
Name me | 9/16/2002 | 9/30/2002 | $1,000 | All | All |
Totals | $110,950 |
The marketing strategy is the core of our main strategy:
Specific sales programs will be included in our new Marketing Plan, and will be included in this Business Plan as they are finalized. In general however, our sales programs will be centered around conducting workflow and information distribution analyses, direct mail, and placing an emphasis on the benefits which IMH and its manufacturers will be able to offer its clients through “total care” service and support.
For businesses who want to be sure their information distribution systems are always working reliably, IMH is a vendor and trusted strategic ally who makes certain their systems work, their people are trained, and their down time is minimal. Unlike the product/price oriented vendors, it knows the customer and goes to their site when needed, and offers proactive support, service, training, and installation.
We must charge appropriately for the high-end, high-quality service and support we offer. Our revenue structure has to match our cost structure, so the salaries we pay to assure good service and support must be balanced by the revenue we charge.
We cannot build the service and support revenue into the price of products. The market can’t bear the higher prices and the buyer feels ill-used when they see a similar product priced lower with the competition. Despite the logic behind this, the market doesn’t support this concept.
We will employ the following general promotional strategies for the various market segments:
IMH is first and foremost a direct sales organization, meaning that we must present our services and products directly to the majority of our customers and clients. Having said that, for our planned penetration into the SOHO market, we will need to establish a presence as a Value-Added Reseller (VAR) for certain low-end product lines which don’t carry the margins necessary to sustain the costs of direct sales. We will plan our new locations accordingly.
As we work to complete this Business Plan, we are simultaneously working on our Marketing Plan. As you can see from the milestones table, we anticipate completion of our detailed Marketing Plan by 9/30/01, or one month from start-up. Because we are acquiring an on-going business, the shift to our vision of customer- and market-focused strategies will not happen overnight. We must plan this shift carefully, and implement it judiciously, so as not to disrupt our immediate operations. We have budgeted for, and will utilize, marketing advisors and consultants (including our manufacturers) in the design of our Marketing Plan.
Our alliances with our manufacturers, and especially Canon USA, will be the most pivotal to our success. We will remain a Canon Authorized Dealer, and continue to enjoy all of the benefits of this long-standing relationship.
We will form alliances with other locally-based VARs and computer network providers to enable us to provide complete turnkey packages for our clients. These relationships will be included in our Marketing Plan.
Our management philosophy is simple and is an integral part of our values: doing right things right, the first time (Kina’ole).
IMH will be an employee-owned company and we all share the same vision of providing our clients (who in many cases are friends and neighbors) with the very best in customer service – period. We will encourage personal growth, creativity, and enable individual empowerment to achieve this goal. We will manage the business by setting achievable Balanced Scorecard goals, measuring them, and making mid-stream adjustments as necessary.
Our team includes 15 employees initially, and is organizationally flat. The departmental divisions are sales and marketing, service, and administration. Operational managers include:
The total head count moving over from Servco at the time of the acquisition will be 13. We are adding two former employees at startup to round out our team, for a total startup head count of 15.
There are an additional six positions shown as “vacant” in the Personnel plan. During each quarterly business plan review, we will assess the need to fund these positions to sustain our growth, and more evenly distribute the workload.
Personnel Plan | |||
Year 1 | Year 2 | Year 3 | |
Production Personnel | |||
None planned | $0 | $0 | $0 |
Other | $0 | $0 | $0 |
Subtotal | $0 | $0 | $0 |
Sales and Marketing Personnel | |||
Alan Fukuyama – Sales (Maui) | $38,250 | $40,545 | $42,978 |
Brian Kurlansky – Sales (Kona) | $38,250 | $40,545 | $42,978 |
Jay Moore – Sales (Maui) | $38,250 | $40,545 | $42,978 |
Wilbert Shimabukuro – Sales (Hilo) | $38,250 | $40,545 | $42,978 |
Vacant – Aftermarket Sales (Maui) | $0 | $0 | $0 |
Vacant – Aftermarket Sales (Hilo) | $0 | $0 | $0 |
Subtotal | $153,000 | $162,180 | $171,911 |
General and Administrative Personnel | |||
Bill Harding – General Manager | $57,600 | $61,056 | $64,719 |
Laurie Watson – Admin Manager | $45,600 | $48,336 | $51,236 |
Vacant – Office Manager (Hilo) | $31,200 | $33,072 | $35,056 |
Vacant – Whse & Delivery (Maui) | $0 | $0 | $0 |
Vacant – Whse & Delivery (Hilo) | $0 | $0 | $0 |
Other | $0 | $0 | $0 |
Subtotal | $134,400 | $142,464 | $151,012 |
Other Personnel | |||
Earle Oshiro – Systems Manager (Hilo) | $49,800 | $52,788 | $55,955 |
Joe Alfonsi – Systems Manager (Maui) | $49,800 | $52,788 | $55,955 |
Wane Ogawa – Syst Engineer (Hilo) | $39,600 | $41,976 | $44,495 |
Francis Takahashi – Syst Engineer (Hilo) | $39,600 | $41,976 | $44,495 |
Baron Ganeko – Syst Engineer (Kona) | $39,600 | $41,976 | $44,495 |
Abe Braceros – Sr. Syst Engineer (Maui) | $41,100 | $43,566 | $46,180 |
Arlo Villanueva – Syst Tech (Maui) | $28,800 | $30,528 | $32,360 |
Caroline Nacua – Syst Tech (Maui) | $28,800 | $30,528 | $32,360 |
Vacant – Syst Tech (Kona) | $0 | $0 | $0 |
Vacant – Syst Tech (Maui) | $0 | $0 | $0 |
Subtotal | $317,100 | $336,126 | $356,294 |
Total People | 15 | 15 | 15 |
Total Payroll | $604,500 | $640,770 | $679,216 |
Bill Harding, president and general manager: XX years old, and has lived on Maui for 43 years. Joined SIOT in 1998 as Maui branch manager, and became general manager for Neighbor Island operations six months later. Prior management experience includes: BTA market manager of the Neighbor Islands for VoiceStream Wireless, Neighbor Island area sales manager for Central Security Systems, and radar project manager for Telcom International in Nigeria, West Africa. Bill has attended numerous management and sales training courses and seminars throughout his career.
Laurie Watson, secretary/treasurer and administrative manager: XX years old, and local Maui resident. Has been at the same location through three different owners prior to Servco’s acquisition of The Office Place in 1995, for a total of 15 years of local office equipment industry experience. Laurie has extensive knowledge of service procedures and dispatching, A/R and A/P procedures, inventory control and tracking, as well as an intimate knowledge of our customer base. Her experience and knowledge will be invaluable in recovering our customer base, and in growing the business.
Anne Tioganco, office manager (Hilo): XX years old, and local Hilo resident. Anne has also been with the company through all of the acquisitions, and has XX years experience in the office equipment industry. She will assist Laurie by handling the administrative and customer service tasks for our Hilo branch, and will be instrumental in our Big Island customer recovery efforts.
Earle Oshiro, systems manager (Big Island): XX years old, and local Hilo resident. Like Laurie and Anne above, Earle has been with the company through four different owners, and has XX years of local office equipment service management experience. Earle has also completed Canon’s “train the trainer” course, and will be a great asset in the on-going training and development of our systems engineers and technicians.
Joseph Alfonsi, systems manager (Maui): XX years old, and local Maui resident. Joe joined the Maui branch of SIOT in 1999 as field service manager, after transferring from the SIOT Honolulu branch. He has XX years of local office equipment industry service experience, and is familiar with both Canon and Ricoh products. Joe is an asset to the Maui team, and has outstanding customer service skills.
We believe we have a good team for covering the main points of the business plan. Key members have the experience and knowledge to manage and grow the business, and are highly motivated by the employee-owner concept.
The obvious management gap is a plan to fill the general manager’s position at some point in the future, before the current GM reaches retirement age. As an employee-owned company, the preferred strategy will be to promote from within, and fill vacancies as they occur. As the company grows, we will seek out additional talent in all operational areas.
Although we are treating the business as a start-up company, the financial plan is solidly based on past performance. We have taken actual SIOT P&L income and expenses from the past three years, and eliminated corporate overhead expenses such as warehouse and administrative costs, inventory penalties, and corporate nominal interest. We then projected income based on actual past performance, and factored back in the revenue base that was relocated to Honolulu over the past two years (mainly service and supplies).
We approached the financial planning from a conservative standpoint, and based those numbers on achievable gross margins. Also, our actual interest and tax rates will most likely be lower than the assumed rates due to our being structured as an employee-owned corporation (ESOT).
The financial plan depends on important assumptions, most of which are shown in Table 7.1. As mentioned previously, we assumed interest and tax rates based on a “worst case” scenario, and these will be adjusted once we have finalized the initial funding and establish the ESOT. We have also assumed our personnel burden at 30% of payroll in order to allow for above-average benefits for our employees. As we shop around for benefits vendors, this assumption will be subject to revision as well.
Other key business assumptions are:
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 14.00% | 14.00% | 14.00% |
Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
Tax Rate | 37.33% | 38.00% | 37.33% |
Other | 0 | 0 | 0 |
As shown in the Benchmarks chart below, our key financial indicators are:
For our break-even analysis, we assume running costs which include our full payroll, rent, and utilities, and an estimation of other running costs. Payroll alone, at present, is about $65,500 per month (including benefits and taxes).
We will monitor gross margins very closely, and maintain them at a midrange percentage by taking advantage of all promotions and discounts offered by our manufacturers. Canon USA has tentatively agreed to offer us “end column” pricing as a new dealer incentive.
The chart shows what we need to sell per month to break even, according to these assumptions. This is about 78% of our projected sales for our first year, and is well below what we have achieved annually over the past three years under more adverse operating conditions.
Break-even Analysis | |
Monthly Revenue Break-even | $209,018 |
Assumptions: | |
Average Percent Variable Cost | 51% |
Estimated Monthly Fixed Cost | $101,932 |
Our Pro Forma Profit and Loss statement was constructed from a conservative point-of-view, and is based in large part on past performance. By strengthening our service position, and rebuilding our customer relationships, we will widen our customer base and increase sales.
Month-to-month assumptions for profit and loss are included in the appendix.
Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $3,190,329 | $3,668,878 | $4,219,209 |
Direct Cost of Sales | $1,634,497 | $1,863,326 | $2,124,192 |
Production Payroll | $0 | $0 | $0 |
Other | $0 | $0 | $0 |
Total Cost of Sales | $1,634,497 | $1,863,326 | $2,124,192 |
Gross Margin | $1,555,832 | $1,805,552 | $2,095,017 |
Gross Margin % | 48.77% | 49.21% | 49.65% |
Operating Expenses | |||
Sales and Marketing Expenses | |||
Sales and Marketing Payroll | $153,000 | $162,180 | $171,911 |
Advertising/Promotion | $10,500 | $11,130 | $11,798 |
Commissions | $159,516 | $169,087 | $179,233 |
Travel – Sales | $22,500 | $23,850 | $25,281 |
Learning & Growth – Sales | $6,150 | $6,519 | $6,910 |
Entertainment | $5,400 | $5,724 | $6,067 |
Total Sales and Marketing Expenses | $357,066 | $378,490 | $401,200 |
Sales and Marketing % | 11.19% | 10.32% | 9.51% |
General and Administrative Expenses | |||
General and Administrative Payroll | $134,400 | $142,464 | $151,012 |
Sales and Marketing and Other Expenses | $0 | $0 | $0 |
Depreciation | $0 | $0 | $0 |
Depreciation | $0 | $0 | $0 |
Utilities | $9,000 | $9,540 | $10,112 |
Telephone & ISP | $34,200 | $36,252 | $38,427 |
Office Supplies | $4,200 | $4,452 | $4,719 |
Insurance | $16,800 | $17,808 | $18,876 |
Bank Charges | $6,000 | $6,360 | $6,742 |
Postage | $10,020 | $10,621 | $11,258 |
Taxes & Licenses | $10,200 | $10,812 | $11,461 |
Bonuses | $0 | $0 | $0 |
Learning & Growth – Admin | $3,150 | $3,339 | $3,539 |
Accounting | $6,000 | $6,360 | $6,742 |
Rent | $72,000 | $72,000 | $72,000 |
Payroll Taxes | $181,350 | $192,231 | $203,765 |
Other General and Administrative Expenses | $0 | $0 | $0 |
Total General and Administrative Expenses | $487,320 | $512,239 | $538,654 |
General and Administrative % | 15.27% | 13.96% | 12.77% |
Other Expenses: | |||
Other Payroll | $317,100 | $336,126 | $356,294 |
Consultants | $0 | $0 | $0 |
Learning & Growth – Service | $9,200 | $9,752 | $10,337 |
Travel – Service | $22,500 | $23,850 | $25,281 |
Freight & Cartage | $30,000 | $31,800 | $33,708 |
Total Other Expenses | $378,800 | $401,528 | $425,620 |
Other % | 11.87% | 10.94% | 10.09% |
Total Operating Expenses | $1,223,186 | $1,292,258 | $1,365,473 |
Profit Before Interest and Taxes | $332,645 | $513,294 | $729,544 |
EBITDA | $332,645 | $513,294 | $729,544 |
Interest Expense | $140,000 | $127,050 | $99,750 |
Taxes Incurred | $72,797 | $146,773 | $235,123 |
Net Profit | $119,848 | $239,471 | $394,671 |
Net Profit/Sales | 3.76% | 6.53% | 9.35% |
Because we are treating the new company as a start-up, the cash flow for FY2002 is somewhat exaggerated by the instant influx of new capital. Subsequent years however show a healthy growth in cash flow, mainly due to the short 60-month repayment of the start-up loan and increased sales.
Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $2,073,714 | $2,384,771 | $2,742,486 |
Cash from Receivables | $906,354 | $1,252,568 | $1,440,453 |
Subtotal Cash from Operations | $2,980,067 | $3,637,339 | $4,182,939 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 |
New Investment Received | $30,000 | $0 | $0 |
Subtotal Cash Received | $3,010,067 | $3,637,339 | $4,182,939 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $604,500 | $640,770 | $679,216 |
Bill Payments | $2,210,315 | $2,809,360 | $3,143,202 |
Subtotal Spent on Operations | $2,814,815 | $3,450,130 | $3,822,418 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $0 | $185,000 | $205,000 |
Other Liabilities Principal Repayment | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $2,814,815 | $3,635,130 | $4,027,418 |
Net Cash Flow | $195,252 | $2,209 | $155,521 |
Cash Balance | $420,252 | $422,461 | $577,982 |
The Projected Balance Sheet is quite solid. We do not project any trouble meeting our debt obligations as long as we achieve our specific objectives.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $420,252 | $422,461 | $577,982 |
Accounts Receivable | $210,261 | $241,801 | $278,071 |
Inventory | $172,142 | $196,241 | $223,715 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $802,655 | $860,503 | $1,079,768 |
Long-term Assets | |||
Long-term Assets | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 |
Total Assets | $802,655 | $860,503 | $1,079,768 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $227,807 | $231,184 | $260,778 |
Current Borrowing | $1,000,000 | $815,000 | $610,000 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $1,227,807 | $1,046,184 | $870,778 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $1,227,807 | $1,046,184 | $870,778 |
Paid-in Capital | $30,000 | $30,000 | $30,000 |
Retained Earnings | ($575,000) | ($455,152) | ($215,681) |
Earnings | $119,848 | $239,471 | $394,671 |
Total Capital | ($425,152) | ($185,681) | $208,990 |
Total Liabilities and Capital | $802,655 | $860,503 | $1,079,768 |
Net Worth | ($425,152) | ($185,681) | $208,990 |
The following table shows our main business ratios, and is compared to national averages. Our SIC industry class is currently: Office equipment, nec – 5044.99.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 15.00% | 15.00% | 1.50% |
Percent of Total Assets | ||||
Accounts Receivable | 26.20% | 28.10% | 25.75% | 30.97% |
Inventory | 21.45% | 22.81% | 20.72% | 38.08% |
Other Current Assets | 0.00% | 0.00% | 0.00% | 16.04% |
Total Current Assets | 100.00% | 100.00% | 100.00% | 85.09% |
Long-term Assets | 0.00% | 0.00% | 0.00% | 14.91% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 152.97% | 121.58% | 80.64% | 44.30% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 8.46% |
Total Liabilities | 152.97% | 121.58% | 80.64% | 52.76% |
Net Worth | -52.97% | -21.58% | 19.36% | 47.24% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 48.77% | 49.21% | 49.65% | 26.76% |
Selling, General & Administrative Expenses | 45.02% | 42.69% | 40.40% | 15.95% |
Advertising Expenses | 0.33% | 0.30% | 0.28% | 0.95% |
Profit Before Interest and Taxes | 10.43% | 13.99% | 17.29% | 2.55% |
Main Ratios | ||||
Current | 0.65 | 0.82 | 1.24 | 1.80 |
Quick | 0.51 | 0.63 | 0.98 | 0.87 |
Total Debt to Total Assets | 152.97% | 121.58% | 80.64% | 6.22% |
Pre-tax Return on Net Worth | -45.31% | -208.01% | 301.35% | 55.95% |
Pre-tax Return on Assets | 24.00% | 44.89% | 58.33% | 14.11% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 3.76% | 6.53% | 9.35% | n.a |
Return on Equity | 0.00% | 0.00% | 188.85% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 5.31 | 5.31 | 5.31 | n.a |
Collection Days | 57 | 64 | 64 | n.a |
Inventory Turnover | 10.91 | 10.12 | 10.12 | n.a |
Accounts Payable Turnover | 10.70 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 30 | 28 | n.a |
Total Asset Turnover | 3.97 | 4.26 | 3.91 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.00 | 0.00 | 4.17 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | ($425,152) | ($185,681) | $208,990 | n.a |
Interest Coverage | 2.38 | 4.04 | 7.31 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.25 | 0.23 | 0.26 | n.a |
Current Debt/Total Assets | 153% | 122% | 81% | n.a |
Acid Test | 0.34 | 0.40 | 0.66 | n.a |
Sales/Net Worth | 0.00 | 0.00 | 20.19 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
Sales Forecast | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | |||||||||||||
Hardware – Image Platforms | 0% | $78,500 | $78,500 | $78,500 | $86,350 | $86,350 | $86,350 | $94,985 | $94,985 | $94,985 | $104,484 | $104,484 | $104,484 |
Hardware – Printers | 0% | $5,000 | $5,000 | $5,000 | $5,500 | $5,500 | $5,500 | $6,050 | $6,050 | $6,050 | $6,655 | $6,655 | $6,655 |
Hardware – Facsimiles | 0% | $10,250 | $10,250 | $10,250 | $11,275 | $11,275 | $11,275 | $12,403 | $12,403 | $12,403 | $13,643 | $13,643 | $13,643 |
Hardware – Misc (TW, Shrd) | 0% | $3,250 | $3,250 | $3,250 | $3,575 | $3,575 | $3,575 | $3,933 | $3,933 | $3,933 | $4,326 | $4,326 | $4,326 |
Professional Services | 0% | $0 | $0 | $2,500 | $2,750 | $2,750 | $2,750 | $3,025 | $3,025 | $3,025 | $3,328 | $3,328 | $3,328 |
Government (Comp) | 0% | $6,250 | $6,250 | $6,250 | $6,875 | $6,875 | $6,875 | $7,563 | $7,563 | $7,563 | $8,319 | $8,319 | $8,319 |
Supplies (Toner/Paper) | 0% | $36,000 | $36,000 | $36,000 | $39,600 | $39,600 | $39,600 | $43,560 | $43,560 | $43,560 | $47,916 | $47,916 | $47,916 |
Service – Agreements/Repairs | 0% | $68,000 | $68,000 | $68,000 | $74,800 | $74,800 | $74,800 | $82,280 | $82,280 | $82,280 | $90,508 | $90,508 | $90,508 |
Equipment Rentals | 0% | $17,500 | $17,500 | $17,500 | $19,250 | $19,250 | $19,250 | $21,175 | $21,175 | $21,175 | $23,293 | $23,293 | $23,293 |
Other | 0% | $2,250 | $2,250 | $2,250 | $2,475 | $2,475 | $2,475 | $2,723 | $2,723 | $2,723 | $2,995 | $2,995 | $2,995 |
Total Sales | $227,000 | $227,000 | $229,500 | $252,450 | $252,450 | $252,450 | $277,695 | $277,695 | $277,695 | $305,465 | $305,465 | $305,465 | |
Direct Cost of Sales | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Hardware – Image Platforms | $48,670 | $48,670 | $48,670 | $53,537 | $53,537 | $53,537 | $58,891 | $58,891 | $58,891 | $64,780 | $64,780 | $64,780 | |
Hardware – Printers | $3,250 | $3,250 | $3,250 | $3,575 | $3,575 | $3,575 | $3,933 | $3,933 | $3,933 | $4,326 | $4,326 | $4,326 | |
Hardware – Facsimiles | $6,355 | $6,355 | $6,355 | $6,991 | $6,991 | $6,991 | $7,690 | $7,690 | $7,690 | $8,459 | $8,459 | $8,459 | |
Hardware – Misc (TW, Shrd) | $2,275 | $2,275 | $2,275 | $2,503 | $2,503 | $2,503 | $2,753 | $2,753 | $2,753 | $3,028 | $3,028 | $3,028 | |
Professional Services | $0 | $0 | $1,250 | $1,375 | $1,375 | $1,375 | $1,513 | $1,513 | $1,513 | $1,664 | $1,664 | $1,664 | |
Government (Comp) | $2,188 | $2,188 | $2,188 | $2,406 | $2,406 | $2,406 | $2,647 | $2,647 | $2,647 | $2,912 | $2,912 | $2,912 | |
Supplies (Toner/Paper) | $16,200 | $16,200 | $16,200 | $17,820 | $17,820 | $17,820 | $19,602 | $19,602 | $19,602 | $21,562 | $21,562 | $21,562 | |
Service – Agreements/Repairs | $27,200 | $27,200 | $27,200 | $29,920 | $29,920 | $29,920 | $32,912 | $32,912 | $32,912 | $36,203 | $36,203 | $36,203 | |
Equipment Rentals | $9,625 | $9,625 | $9,625 | $10,588 | $10,588 | $10,588 | $11,646 | $11,646 | $11,646 | $12,811 | $12,811 | $12,811 | |
Other | $563 | $563 | $563 | $619 | $619 | $619 | $681 | $681 | $681 | $749 | $749 | $749 | |
Subtotal Direct Cost of Sales | $116,325 | $116,325 | $117,575 | $129,333 | $129,333 | $129,333 | $142,266 | $142,266 | $142,266 | $156,492 | $156,492 | $156,492 |
Personnel Plan | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Production Personnel | |||||||||||||
None planned | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales and Marketing Personnel | |||||||||||||
Alan Fukuyama – Sales (Maui) | $3,000 | $3,000 | $3,000 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | |
Brian Kurlansky – Sales (Kona) | $3,000 | $3,000 | $3,000 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | |
Jay Moore – Sales (Maui) | $3,000 | $3,000 | $3,000 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | |
Wilbert Shimabukuro – Sales (Hilo) | $3,000 | $3,000 | $3,000 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | $3,250 | |
Vacant – Aftermarket Sales (Maui) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Vacant – Aftermarket Sales (Hilo) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal | $12,000 | $12,000 | $12,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | |
General and Administrative Personnel | |||||||||||||
Bill Harding – General Manager | $4,500 | $4,500 | $4,500 | $4,900 | $4,900 | $4,900 | $4,900 | $4,900 | $4,900 | $4,900 | $4,900 | $4,900 | |
Laurie Watson – Admin Manager | $3,650 | $3,650 | $3,650 | $3,850 | $3,850 | $3,850 | $3,850 | $3,850 | $3,850 | $3,850 | $3,850 | $3,850 | |
Vacant – Office Manager (Hilo) | $2,450 | $2,450 | $2,450 | $2,650 | $2,650 | $2,650 | $2,650 | $2,650 | $2,650 | $2,650 | $2,650 | $2,650 | |
Vacant – Whse & Delivery (Maui) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Vacant – Whse & Delivery (Hilo) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal | $10,600 | $10,600 | $10,600 | $11,400 | $11,400 | $11,400 | $11,400 | $11,400 | $11,400 | $11,400 | $11,400 | $11,400 | |
Other Personnel | |||||||||||||
Earle Oshiro – Systems Manager (Hilo) | $4,000 | $4,000 | $4,000 | $4,200 | $4,200 | $4,200 | $4,200 | $4,200 | $4,200 | $4,200 | $4,200 | $4,200 | |
Joe Alfonsi – Systems Manager (Maui) | $4,000 | $4,000 | $4,000 | $4,200 | $4,200 | $4,200 | $4,200 | $4,200 | $4,200 | $4,200 | $4,200 | $4,200 | |
Wane Ogawa – Syst Engineer (Hilo) | $3,150 | $3,150 | $3,150 | $3,350 | $3,350 | $3,350 | $3,350 | $3,350 | $3,350 | $3,350 | $3,350 | $3,350 | |
Francis Takahashi – Syst Engineer (Hilo) | $3,150 | $3,150 | $3,150 | $3,350 | $3,350 | $3,350 | $3,350 | $3,350 | $3,350 | $3,350 | $3,350 | $3,350 | |
Baron Ganeko – Syst Engineer (Kona) | $3,150 | $3,150 | $3,150 | $3,350 | $3,350 | $3,350 | $3,350 | $3,350 | $3,350 | $3,350 | $3,350 | $3,350 | |
Abe Braceros – Sr. Syst Engineer (Maui) | $3,200 | $3,200 | $3,200 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | |
Arlo Villanueva – Syst Tech (Maui) | $2,250 | $2,250 | $2,250 | $2,450 | $2,450 | $2,450 | $2,450 | $2,450 | $2,450 | $2,450 | $2,450 | $2,450 | |
Caroline Nacua – Syst Tech (Maui) | $2,250 | $2,250 | $2,250 | $2,450 | $2,450 | $2,450 | $2,450 | $2,450 | $2,450 | $2,450 | $2,450 | $2,450 | |
Vacant – Syst Tech (Kona) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Vacant – Syst Tech (Maui) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal | $25,150 | $25,150 | $25,150 | $26,850 | $26,850 | $26,850 | $26,850 | $26,850 | $26,850 | $26,850 | $26,850 | $26,850 | |
Total People | 15 | 15 | 15 | 15 | 15 | 15 | 15 | 15 | 15 | 15 | 15 | 15 | |
Total Payroll | $47,750 | $47,750 | $47,750 | $51,250 | $51,250 | $51,250 | $51,250 | $51,250 | $51,250 | $51,250 | $51,250 | $51,250 |
General Assumptions | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Plan Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
Current Interest Rate | 14.00% | 14.00% | 14.00% | 14.00% | 14.00% | 14.00% | 14.00% | 14.00% | 14.00% | 14.00% | 14.00% | 14.00% | |
Long-term Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | |
Tax Rate | 30.00% | 38.00% | 38.00% | 38.00% | 38.00% | 38.00% | 38.00% | 38.00% | 38.00% | 38.00% | 38.00% | 38.00% | |
Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Pro Forma Profit and Loss | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | $227,000 | $227,000 | $229,500 | $252,450 | $252,450 | $252,450 | $277,695 | $277,695 | $277,695 | $305,465 | $305,465 | $305,465 | |
Direct Cost of Sales | $116,325 | $116,325 | $117,575 | $129,333 | $129,333 | $129,333 | $142,266 | $142,266 | $142,266 | $156,492 | $156,492 | $156,492 | |
Production Payroll | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Cost of Sales | $116,325 | $116,325 | $117,575 | $129,333 | $129,333 | $129,333 | $142,266 | $142,266 | $142,266 | $156,492 | $156,492 | $156,492 | |
Gross Margin | $110,675 | $110,675 | $111,925 | $123,118 | $123,118 | $123,118 | $135,429 | $135,429 | $135,429 | $148,972 | $148,972 | $148,972 | |
Gross Margin % | 48.76% | 48.76% | 48.77% | 48.77% | 48.77% | 48.77% | 48.77% | 48.77% | 48.77% | 48.77% | 48.77% | 48.77% | |
Operating Expenses | |||||||||||||
Sales and Marketing Expenses | |||||||||||||
Sales and Marketing Payroll | $12,000 | $12,000 | $12,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | |
Advertising/Promotion | $500 | $500 | $500 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | |
Commissions | $11,350 | $11,350 | $11,475 | $12,623 | $12,623 | $12,623 | $13,885 | $13,885 | $13,885 | $15,273 | $15,273 | $15,273 | |
Travel – Sales | $1,500 | $1,500 | $1,500 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | |
Learning & Growth – Sales | $0 | $0 | $0 | $400 | $400 | $400 | $400 | $400 | $400 | $1,250 | $1,250 | $1,250 | |
Entertainment | $450 | $450 | $450 | $450 | $450 | $450 | $450 | $450 | $450 | $450 | $450 | $450 | |
Total Sales and Marketing Expenses | $25,800 | $25,800 | $25,925 | $29,473 | $29,473 | $29,473 | $30,735 | $30,735 | $30,735 | $32,973 | $32,973 | $32,973 | |
Sales and Marketing % | 11.37% | 11.37% | 11.30% | 11.67% | 11.67% | 11.67% | 11.07% | 11.07% | 11.07% | 10.79% | 10.79% | 10.79% | |
General and Administrative Expenses | |||||||||||||
General and Administrative Payroll | $10,600 | $10,600 | $10,600 | $11,400 | $11,400 | $11,400 | $11,400 | $11,400 | $11,400 | $11,400 | $11,400 | $11,400 | |
Sales and Marketing and Other Expenses | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Depreciation | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Depreciation | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Utilities | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $750 | |
Telephone & ISP | $2,850 | $2,850 | $2,850 | $2,850 | $2,850 | $2,850 | $2,850 | $2,850 | $2,850 | $2,850 | $2,850 | $2,850 | |
Office Supplies | $350 | $350 | $350 | $350 | $350 | $350 | $350 | $350 | $350 | $350 | $350 | $350 | |
Insurance | $1,400 | $1,400 | $1,400 | $1,400 | $1,400 | $1,400 | $1,400 | $1,400 | $1,400 | $1,400 | $1,400 | $1,400 | |
Bank Charges | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | |
Postage | $835 | $835 | $835 | $835 | $835 | $835 | $835 | $835 | $835 | $835 | $835 | $835 | |
Taxes & Licenses | $850 | $850 | $850 | $850 | $850 | $850 | $850 | $850 | $850 | $850 | $850 | $850 | |
Bonuses | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Learning & Growth – Admin | $0 | $0 | $0 | $150 | $150 | $150 | $150 | $150 | $150 | $750 | $750 | $750 | |
Accounting | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | |
Rent | $6,000 | $6,000 | $6,000 | $6,000 | $6,000 | $6,000 | $6,000 | $6,000 | $6,000 | $6,000 | $6,000 | $6,000 | |
Payroll Taxes | 30% | $14,325 | $14,325 | $14,325 | $15,375 | $15,375 | $15,375 | $15,375 | $15,375 | $15,375 | $15,375 | $15,375 | $15,375 |
Other General and Administrative Expenses | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total General and Administrative Expenses | $38,960 | $38,960 | $38,960 | $40,960 | $40,960 | $40,960 | $40,960 | $40,960 | $40,960 | $41,560 | $41,560 | $41,560 | |
General and Administrative % | 17.16% | 17.16% | 16.98% | 16.22% | 16.22% | 16.22% | 14.75% | 14.75% | 14.75% | 13.61% | 13.61% | 13.61% | |
Other Expenses: | |||||||||||||
Other Payroll | $25,150 | $25,150 | $25,150 | $26,850 | $26,850 | $26,850 | $26,850 | $26,850 | $26,850 | $26,850 | $26,850 | $26,850 | |
Consultants | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Learning & Growth – Service | $0 | $0 | $0 | $850 | $850 | $850 | $650 | $650 | $850 | $1,500 | $1,500 | $1,500 | |
Travel – Service | $1,500 | $1,500 | $1,500 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | |
Freight & Cartage | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | |
Total Other Expenses | $29,150 | $29,150 | $29,150 | $32,200 | $32,200 | $32,200 | $32,000 | $32,000 | $32,200 | $32,850 | $32,850 | $32,850 | |
Other % | 12.84% | 12.84% | 12.70% | 12.76% | 12.76% | 12.76% | 11.52% | 11.52% | 11.60% | 10.75% | 10.75% | 10.75% | |
Total Operating Expenses | $93,910 | $93,910 | $94,035 | $102,633 | $102,633 | $102,633 | $103,695 | $103,695 | $103,895 | $107,383 | $107,383 | $107,383 | |
Profit Before Interest and Taxes | $16,765 | $16,765 | $17,890 | $20,485 | $20,485 | $20,485 | $31,735 | $31,735 | $31,535 | $41,589 | $41,589 | $41,589 | |
EBITDA | $16,765 | $16,765 | $17,890 | $20,485 | $20,485 | $20,485 | $31,735 | $31,735 | $31,535 | $41,589 | $41,589 | $41,589 | |
Interest Expense | $11,667 | $11,667 | $11,667 | $11,667 | $11,667 | $11,667 | $11,667 | $11,667 | $11,667 | $11,667 | $11,667 | $11,667 | |
Taxes Incurred | $1,530 | $1,937 | $2,365 | $3,351 | $3,351 | $3,351 | $7,626 | $7,626 | $7,550 | $11,370 | $11,370 | $11,370 | |
Net Profit | $3,569 | $3,161 | $3,858 | $5,467 | $5,467 | $5,467 | $12,442 | $12,442 | $12,318 | $18,552 | $18,552 | $18,552 | |
Net Profit/Sales | 1.57% | 1.39% | 1.68% | 2.17% | 2.17% | 2.17% | 4.48% | 4.48% | 4.44% | 6.07% | 6.07% | 6.07% |
Pro Forma Cash Flow | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Cash Received | |||||||||||||
Cash from Operations | |||||||||||||
Cash Sales | $147,550 | $147,550 | $149,175 | $164,093 | $164,093 | $164,093 | $180,502 | $180,502 | $180,502 | $198,552 | $198,552 | $198,552 | |
Cash from Receivables | $0 | $2,648 | $79,450 | $79,479 | $80,593 | $88,358 | $88,358 | $88,652 | $97,193 | $97,193 | $97,517 | $106,913 | |
Subtotal Cash from Operations | $147,550 | $150,198 | $228,625 | $243,572 | $244,685 | $252,450 | $268,859 | $269,154 | $277,695 | $295,745 | $296,069 | $305,465 | |
Additional Cash Received | |||||||||||||
Sales Tax, VAT, HST/GST Received | 0.00% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Investment Received | $30,000 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Received | $177,550 | $150,198 | $228,625 | $243,572 | $244,685 | $252,450 | $268,859 | $269,154 | $277,695 | $295,745 | $296,069 | $305,465 | |
Expenditures | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Expenditures from Operations | |||||||||||||
Cash Spending | $47,750 | $47,750 | $47,750 | $51,250 | $51,250 | $51,250 | $51,250 | $51,250 | $51,250 | $51,250 | $51,250 | $51,250 | |
Bill Payments | $3,455 | $106,054 | $176,195 | $180,247 | $208,235 | $195,733 | $196,816 | $227,755 | $214,007 | $215,366 | $250,790 | $235,663 | |
Subtotal Spent on Operations | $51,205 | $153,804 | $223,945 | $231,497 | $259,485 | $246,983 | $248,066 | $279,005 | $265,257 | $266,616 | $302,040 | $286,913 | |
Additional Cash Spent | |||||||||||||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Dividends | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Spent | $51,205 | $153,804 | $223,945 | $231,497 | $259,485 | $246,983 | $248,066 | $279,005 | $265,257 | $266,616 | $302,040 | $286,913 | |
Net Cash Flow | $126,345 | ($3,605) | $4,680 | $12,075 | ($14,800) | $5,467 | $20,793 | ($9,852) | $12,438 | $29,129 | ($5,971) | $18,552 | |
Cash Balance | $351,345 | $347,740 | $352,420 | $364,495 | $349,696 | $355,163 | $375,956 | $366,105 | $378,543 | $407,672 | $401,700 | $420,252 |
Pro Forma Balance Sheet | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Assets | Starting Balances | ||||||||||||
Current Assets | |||||||||||||
Cash | $225,000 | $351,345 | $347,740 | $352,420 | $364,495 | $349,696 | $355,163 | $375,956 | $366,105 | $378,543 | $407,672 | $401,700 | $420,252 |
Accounts Receivable | $0 | $79,450 | $156,252 | $157,127 | $166,005 | $173,770 | $173,770 | $182,606 | $191,147 | $191,147 | $200,866 | $210,261 | $210,261 |
Inventory | $200,000 | $127,958 | $127,958 | $129,333 | $142,266 | $142,266 | $142,266 | $156,492 | $156,492 | $156,492 | $172,142 | $172,142 | $172,142 |
Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Current Assets | $425,000 | $558,753 | $631,949 | $638,879 | $672,766 | $665,731 | $671,199 | $715,054 | $713,744 | $726,182 | $780,679 | $784,103 | $802,655 |
Long-term Assets | |||||||||||||
Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Assets | $425,000 | $558,753 | $631,949 | $638,879 | $672,766 | $665,731 | $671,199 | $715,054 | $713,744 | $726,182 | $780,679 | $784,103 | $802,655 |
Liabilities and Capital | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Current Liabilities | |||||||||||||
Accounts Payable | $0 | $100,184 | $170,219 | $173,291 | $201,710 | $189,208 | $189,208 | $220,622 | $206,870 | $206,989 | $242,935 | $227,807 | $227,807 |
Current Borrowing | $1,000,000 | $1,000,000 | $1,000,000 | $1,000,000 | $1,000,000 | $1,000,000 | $1,000,000 | $1,000,000 | $1,000,000 | $1,000,000 | $1,000,000 | $1,000,000 | $1,000,000 |
Other Current Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Subtotal Current Liabilities | $1,000,000 | $1,100,184 | $1,170,219 | $1,173,291 | $1,201,710 | $1,189,208 | $1,189,208 | $1,220,622 | $1,206,870 | $1,206,989 | $1,242,935 | $1,227,807 | $1,227,807 |
Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Liabilities | $1,000,000 | $1,100,184 | $1,170,219 | $1,173,291 | $1,201,710 | $1,189,208 | $1,189,208 | $1,220,622 | $1,206,870 | $1,206,989 | $1,242,935 | $1,227,807 | $1,227,807 |
Paid-in Capital | $0 | $30,000 | $30,000 | $30,000 | $30,000 | $30,000 | $30,000 | $30,000 | $30,000 | $30,000 | $30,000 | $30,000 | $30,000 |
Retained Earnings | ($575,000) | ($575,000) | ($575,000) | ($575,000) | ($575,000) | ($575,000) | ($575,000) | ($575,000) | ($575,000) | ($575,000) | ($575,000) | ($575,000) | ($575,000) |
Earnings | $0 | $3,569 | $6,730 | $10,588 | $16,056 | $21,523 | $26,990 | $39,432 | $51,874 | $64,193 | $82,744 | $101,296 | $119,848 |
Total Capital | ($575,000) | ($541,431) | ($538,270) | ($534,412) | ($528,944) | ($523,477) | ($518,010) | ($505,568) | ($493,126) | ($480,807) | ($462,256) | ($443,704) | ($425,152) |
Total Liabilities and Capital | $425,000 | $558,753 | $631,949 | $638,879 | $672,766 | $665,731 | $671,199 | $715,054 | $713,744 | $726,182 | $780,679 | $784,103 | $802,655 |
Net Worth | ($575,000) | ($541,431) | ($538,270) | ($534,412) | ($528,944) | ($523,477) | ($518,010) | ($505,568) | ($493,126) | ($480,807) | ($462,256) | ($443,704) | ($425,152) |
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An effective IT strategy plan clearly defines an IT organization's mission and requirements, and it translates that mission into long- and short-range actionable goals. An effective IT strategic plan also reflects and drives the enterprise's business strategy and goals. Sounds straightforward enough, right? But as technology has become a business differentiator , IT strategic planning is both more crucial and more challenging than ever before. The IT function no longer exists to simply support business goals; IT must help drive the business.
These free IT strategic planning templates and examples of IT strategic plans will help CIOs develop strategies that become powerful tools for the business.
SOURCE #1: Gartner Inc. OFFERING: Build an IT Strategic Plan That You Will Actually Use
Gartner is of the mind that IT strategic plans are WORN, i.e., written once, read never. To address the sit-on-the-shelf fate of such documents, Gartner analyst Heather Colella offers " Your one-page IT strategy template and guide ." A central tenet of this plan -- besides being on one page -- is that CIOs will help their companies perform better by using storytelling to show how IT strategies drive business success. "Storytelling helps CIOs and IT leaders to engage business leaders in a strategy business conversation by visualizing the business model in a way that can be easily shared for collaboration across the enterprise," Colella explained.
Gartner recommends following four steps in preparation for your one-page plan:
The details on translating your strategy story into a strategic plan are spelled out in this downloadable PDF. The one-page document includes the three foundational elements of any strategic plan: business objectives, business capabilities and key performance indicators.
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SOURCE #2: Info-Tech Research Group OFFERING: SME IT Strategic Plan Template
This free IT strategic plan template spells out simple yet effective procedures for aligning IT strategy with your company's strategic objectives and initiatives. It is designed for small and midsized enterprises. (Registration is required and can take a few minutes to gain access.)
The template includes the following sections:
SOURCE #3 : CIO Index OFFERING : IT Strategy Template
This IT strategic planning template lists 21 questions aimed at helping IT executives develop a plan that reflects business pain points and objectives. (Registration required for the downloadable template.)
The 21 questions are grouped in five categories.
SOURCE #4: Business 2 Community OFFERING: Strategic Plan Template
Clive Keyte, managing director of strategy at mapping consultancy Intrafocus, shared his expertise on developing strategic plans . "The mistake that is often made in strategic planning is to jump straight to initiatives or projects without considering business impact carefully," Keyte said. He offers the following five things to do to embed strategy into your culture:
His editable strategic plan template, replete with planning charts and examples, includes sections for vision, mission, core values, strategic themes, a strategy map, business objectives, strategic initiatives and a financial summary.
SOURCE #5: Apptio OFFERING: 10 Essential KPIs for the IT Strategic Planning Process
Apptio's guide to developing an effective IT strategic plan lays out the 10 key performance indicators ( KPIs ) deemed essential for delivering business value. "IT strategic plans need KPIs that show financial fundamentals, delivery, innovation, and agility to support the business strategy. These aren't operational measures of "feeds and speeds" -- they are proof points that IT is delivering business value." (Registration required to access the full guide.)
IT strategic plans for higher education institutions and government agencies are readily found on the web. Here are three examples.
SOURCE #6 : Harvard University EXAMPLE: IT strategic plan
This IT strategic planning document takes pains to align IT initiatives with the broader business and academic priorities of the institution.
Harvard University's IT strategic plan updates the university's previous plan and sets forth eight new initiatives established by Harvard's CIO Council. To ensure that the IT initiatives reflected university-wide priorities, the report states that a working group interviewed sources across Harvard, including deans and vice provosts. "The collective input became the foundation on which we built the plan," the report asserts.
The current plan also includes an IT mission statement and lists the IT organization's ongoing priorities: information security; enterprise architecture ; shared service model; research computing and research data compliance; IT workforce development; IT procurement and vendor management; change management ; and sustainability and green IT. The new IT strategic plan document also includes an IT vision statement. (It is downloadable as a PDF.)
SOURCE #7: University of South Florida System EXAMPLE: Information Technology Strategic Plan 2019 - 2023
The University of South Florida (USF) Information Technology Plan includes an executive summary, mission statement, vision statement, list of current services, guiding principles and strategic goals. The executive summary notes that the Office of Campus Computing typically has a much faster planning cycle than other disciplines due to rapid technological changes. It also states that the system's information technology requests "continue to grow at unprecedented rates, and place significant stress on existing Campus Computing infrastructure." The plan lays out estimated costs per year to meet Campus Computing's strategic goals. (It is downloadable as a PDF .)
SOURCE #8: Department of Homeland Security EXAMPLE: DHS Information Technology Strategic Plan 2019-2023
As the introduction notes, the IT department of the Department of Homeland Security plays a powerful role in supporting the agency's mission to keep the country safe and secure. The eight-page plan includes a mission statement, vision statement and seven guiding principles. The plan is built around four goals: culture, connectivity, cybersecurity and customers. Each goal is broken down into a list of objectives and their focus areas.
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Written by Dave Lavinsky
Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their IT companies.
If you’re unfamiliar with creating an IT business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.
In this article, you will learn some background information on why business planning is important. Then, you will learn how to write an IT business plan step-by-step so you can create your plan today.
Download our Ultimate Business Plan Template here >
A business plan provides a snapshot of your IT business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.
If you’re looking to start an IT business or grow your existing IT company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your IT business to improve your chances of success. Your IT business plan is a living document that should be updated annually as your company grows and changes.
With regards to funding, the main sources of funding for an IT business are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for IT companies.
How to write a business plan for an it services business.
If you want to start an IT business or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your IT business plan.
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your executive summary is to quickly engage the reader. Explain to them the kind of IT business you are running and the status. For example, are you a startup, do you have an IT business that you would like to grow, or are you operating a chain of IT businesses?
Next, provide an overview of each of the subsequent sections of your plan.
In your company overview, you will detail the type of IT business you are operating.
For example, you might specialize in one of the following types of IT businesses:
In addition to explaining the type of IT business you will operate, the company overview needs to provide background on the business.
Include answers to questions such as:
In your industry or market analysis, you need to provide an overview of the IT industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the IT industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.
The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your IT business plan:
The customer analysis section of your IT business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: individuals, schools, families, and corporations.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of IT business you operate. Clearly, individuals would respond to different marketing promotions than corporations, for example.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.
Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.
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Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other IT businesses.
Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes other types of IT consultants, in-house IT support, or do-it-yourself IT tutorials. You need to mention such competition as well.
For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
Think about ways you will outperform your competition and document them in this section of your plan.
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For an IT business plan, your marketing strategy should include the following:
Product : In the product section, you should reiterate the type of IT company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide cloud computing, data center management, or network setup services?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.
Place : Place refers to the site of your IT company. Document where your company is situated and mention how the site will impact your success. For example, is your IT business located in a busy retail district, a business district, a standalone office, or purely online? Discuss how your site might be the ideal location for your customers.
Promotions : The final part of your IT marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your IT business, including answering calls, meeting with new clients, billing and collecting payments from clients, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to acquire your Xth client, or when you hope to reach $X in revenue. It could also be when you expect to expand your IT business to a new city.
To demonstrate your IT business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally, you and/or your team members have direct experience in managing IT businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing an IT business or successfully running a small IT consulting service.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.
An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you charge your clients an hourly rate of $250 per hour, and will you work 5 hours per day? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your IT business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.
When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing an IT business:
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or a list of your IT credentials.
Writing a business plan for your IT business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert on IT business planning. You will understand the IT industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful IT business.
What is the easiest way to complete my it services business plan.
Growthink's Ultimate Business Plan Template allows you to quickly and easily write your IT services business plan.
Starting an IT business is easy with these 14 steps:
Don’t you wish there was a faster, easier way to finish your IT business plan?
Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success. Click here to see how Growthink’s business plan services can give you a winning business plan.
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Published: 20 May 2022. An effective IT strategy plan clearly defines an IT organization's mission and requirements, and it translates that mission into long- and short-range actionable goals. An effective IT strategic plan also reflects and drives the enterprise's business strategy and goals.
Download our Ultimate Business Plan Template here > What is an IT Services Business Plan? A business plan provides a snapshot of your IT business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.